I’m going to share a few reasons to refinance your house now. And this is the story of one of our past client.
Recently, the client applied for refinancing. He is 40 years old young, a teacher and very eager to apply for refinancing.
Mainly to fully settled his loan.
He submits in a few application to the banks; however, it wasn’t successful.
Reason for it LOW market value and LOW margin of finance (MOF).
He was disappointed with the outcome.
He wants a higher value, maybe around RM540,000.
But the banks gave this.
Bank A: Market value RM520k. MOF 85%
Bank B: Market value RM500k. MOF 90%
Bank C: Market value RM500k. MOF 85%
Bank D: Market value RM450k. MOF 85%
We almost gave up this case.
But, in the moment of despair, one of the bankers stepped up.
He keeps trying to get a better value for the client. And called almost all the valuer firms in the panellist.
HE GETS THE MARKET VALUE!
After a long and persistent search, he found one!
The one valuer firm who willing to give a higher value – to be exact RM540,000 market value.
It is higher than any other bank.
Besides, the bank margin of finance is 90% which is higher than other banks.
So, we have a clear winner here. Yay!
Bank E: Market value RM540k. MOF 90%
Total Loan Amount: RM486,000
The client was so happy about it and accepted the loan as quickly as possible.
DEBT CONSOLIDATION LOAN – NEW WAY TO REFINANCE
It’s a debt consolidation loan case. And this is one of the new ways to refinance your house.
The solution he got was this.
The new bank will settle the following debts for him.
- Existing refinancing loan RM160k
- Car Loan RM114,000
- Personal Loan 1 RM60,000
- Personal Loan 2 RM70,000
Total debts settle: RM404,000
He will still have additional gross cash in hand of RM486,000 – RM404,000 = RM82,000.
When minus off the Legal fees, stamp duty, disbursement fees, service tax, and valuation fees. He will have the following balance.
Let’s say all the cost estimation is 3%.
3% x RM486,000 = RM14,580.
Let’s round up to RM15,000 for easy calculation.
Total net cash in hand is RM82,000 – RM15,000 = RM67,000.
BEFORE AND AFTER REFINANCE
BEFORE REFINANCE, THIS IS HIS FINANCIAL PROFILE.
- Existing refinancing loan RM160k , instalment RM1100
- Car Loan RM114,000, Instalment RM1400
- Personal Loan 1 RM60,000, Instalment RM670 (longer tenure)
- Personal Loan 2 RM70,000, Instalment RM1500 (shorter tenure)
Total monthly payment is
RM1100+RM1400+RM670+RM1500 = RM4670.00
REASONS TO REFINANCE
AFTER REFINANCE, THIS IS HIS FINANCIAL PROFILE.
NEW Housing Loan: RM486,000, Tenure 28 years, Instalment RM2244
Cash in hand RM67,000
No other debts.
Before refinancing, he needs to pay RM4670 per month.
After refinance, he only needs to pay RM2244 per month.
In fact, he has additional cash to use RM4670-RM2244= RM2426 monthly.
Annually, that will be a saving of RM2426 x 12 months = RM29,112, isn’t this great?
If he wants, he can takes this RM2426 to pay more to his home loan account, which I believe will save the home loan interest and shorter the tenure.
This is the beautiful part about refinancing.
It allows you to restructure your debts so that you can breathe again and take away all the anxiety of paying so many bills monthly.
In addition, he has RM67,000 additional cash for investment, or he can pay more to his home loan, or he can save the money for an emergency.
Ahh.. This is a beautiful ending. It’s going to help and turn a new leaf for this guy.
Before you go, I want to share this.
You know we always tell ourselves this.
We need to save for rainy days. Because during rainy days, we need money and sometimes the income maybe reduce or not enough. Or even worst, perhaps we lose a job.
But, you know what?
Now it is rainy days.
Bad economy, people losing jobs, inflation on the rise, and we are in the middle of a pandemic, for god sakes!
Whatever we are saving in the past is for NOW. We are saving for NOW.
To people who never saved in the past, it could be a tough time for them. Be strong.
If you own a house, maybe you can refinance like this client and get some cash out of it.
But, to those people who do save.
You make the right decision to save for the future.
If you have a question about refinancing, feel free to reach us at 012-6946746 (David)
Talk to you soon!
Before you go, check out this article. You might enjoy reading this.
Refinance Fully Paid House In Malaysia